Three Conditions Defined For U.S. Investments

Gisborne Herald, Volume LXXVI, Issue 23043, 6 September 1949, Page 5

Three Conditions Defined For U.S. Investments

(10 a.m.) Washington, Sept. 5. All appeal to foreign countries to clear away obstacles to the investment of American capital in under-developed areas was made yesterday by Mr. John Snyder, United States Secretary of the Treasury, when speaking at Grand Rapids, Michigan.

Speaking on the eve of the opening of the crucial British-Canadian-Ameri-can dollar conference on Tuesday. Mr. Snyder, who will be chairman of the conference, imposed three conditions upon the foreign Governments wishing to. receive assistance from President Truman’s programme of encouraging such overseas investments. They were: !. Reasonable terms for investors. 2. Convertibility of profits into dollars. 3. Compensation if property were nationalised. Removal of Obstacles Mr. Snyder outlined in detail certain aspects of the programme bv which it is hoped that under-developed parts of the sterling area will receive dollar aid and thus be able to contribute to solving the general dollar shortage of the sterling area.

“We all know there are certain welldefined obstacles which have stood in the way of investment of American capital abroad,” Mr. Snyder said. “The underdeveloped areas must accept a major responsibility for clearing away the obstructions which exist to the broad and beneficial flow of private capital. This requires that foreign Governments must recognise their right to do business in their countries on reasonable terms is considered of paramount importance by our potential investors.

"It also required foreign countries to recognise the right of persons making foreign investments to convert their income from such investments into dollars and to transfer an appropriate share of the dollar proceeds to their own country. Right to Compensation "Finally, although the right to nationalise property within any country’s borders is inherent in sovereignty, the country resorting to the exercise of the right should recognise an equally strong obligation to make satisfactory compensation. “We. on our part, can contribute to the removal of these obstacles by making a special effort to provide certain inducements for our investors to send their capital abroad. "We can help also by supplementing these efforts through the issuance of guarantees with respect to private American investments abroad. “The legislation which we now have before Congress will authorise the Export and Import Bank to guarantee United States private capital invested abroad against risks peculiar to foreign investment. Risks to be Guaranteed “It is important to note here that ordinary business risks are not to be covered by this guarantee. Risks peculiar to foreign investment might, however, include: “1. Inability to convert earnings in foreign countries or other amounts received in connection with foreign investment into United States’ dollars. “2. Expropriation of investors’ property by a foreign Government without prompt and adequate compensation. "3. Physical destruction of property incident to international war.” Mr Snyder said the first stage in the rehabilitation of war-devastated economies had been successfully completed and the United States now would concentrate on helping European countries and under-developed areas to help themselves. High living standards in under-de-veloped countries would benefit not only the countries themselves but all free nations. As the economic life of the underdeveloped areas improved, those areas would supply the world with needed products and would offer an expanded market for American products as well as for those of other countries.